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Plenty has happened since the Bank of England last cut interest rates in April. Inflation has risen to 3.8% - almost double the government's 2% target - requiring the Bank's governor, Mervyn King, to write an explanatory letter to chancellor Alistair Darling. At the same time, the economy has weakened rapidly – today's news from the Halifax of an 11% drop in house prices over the past year is merely the latest evidence of a deflating property bubble.

Official figures suggest Britain continued to expand - if weakly - in the second quarter of the year, but all the signs are that the second half of the year will see the economy slide into its first recession in more than a decade and a half.

Against that backdrop, it was hardly surprising that the Bank's monetary policy committee left interest rates on hold today.

Article continues at Guardian news

Labels: Alistair Darling, Bank of England, chancellor, Halifax, Mervyn King, UK Interest rates, UK recession

The chancellor, Alistair Darling, is prepared to disappoint millions of would-be home buyers by ruling out proposals to revive the housing market, Treasury insiders warned last night. After a chaotic week of claim and counter-claim about Treasury plans to suspend stamp duty for first-time buyers, Darling has hardened his stance against the move, which he believes could cost billions to little positive effect.

Senior officials said the Chancellor might well take no action to prop up the market in the Pre-Budget Report this autumn. 'Alistair is not going to be buffeted into doing something by headlines,' said one insider. 'If the evidence is there that suspending stamp duty would help, then we will look at it. But at the moment the evidence is not there.'

Although work is under way on a range of options involving possible changes to stamp duty and other measures to help buyers, there is deep scepticism about the idea in the Treasury.

Read more at Guardian Online

Labels: Alistair Darling, chancellor, House market, property analysis, property prices, Stamp duty changes